This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.Need a new registration confirmation email? Click here

Put simply, cash still matters in 2014. That's something that's been made very clear by the barrage of M&A activity that's hit the books in the last quarter. Cash also provides a defense against market corrections – firms with large cash positions on their balance sheets have a fundamental backstop that lets them hold their ground better than the rest of the market. But don't think for a second that protecting your portfolio with cash-rich stocks comes at the expense of performance...

In fact, it's a capital gains booster: over the last decade, the top tier of cash-rich stocks worldwide generated total returns of 297%. That's triple what the S&P 500 earned over the same period.

There's no shortage of cash floating around the market right now – in total U.S. stocks hold more than $1.53 trillion. That means that more than a quarter of the S&P's current price tag is covered by cash in the bank. As a percentage of total assets, those are levels not seen since the 1970s.

The benefits of big cash holdings come from what they enable companies to do. Capital gains are great, but historically speaking, the majority of portfolio growth comes from other sources. Dividends, share buybacks, and debt repurchases all inject value directly into your shares, and on a year-to-year basis, they also account for around 50% of annual stock performance. Only companies with lots of cash that have the wherewithal to boost those payouts on command.

In short, cash provides options. Firms with cash can opt to increase shareholder value by paying a dividend or initiating a share buyback – plus, they have the ability to take advantage of pricey M&A opportunities and internal investments.

Product Features:

To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.